Transaction costs are one of the problems associated with various consumer trade having relatively low monetary value. In the instant lottery industry, for example, the costs of redeeming winning lottery tickets involves a significant amount of retail clerical time along with the necessity of the retailer to finance the amount of low value, winning tickets with all the accounting activity that the redemption process requires. Moreover, for lottery games that have a large number of low value winners, for example, $5.00 to $25.00, the redemption costs can seriously discourage retailers from carrying this product.
Prepaid transaction cards such as debit cards are another example of the effect that transaction costs can have on the economics of these products. For low value debit cards, for example $20.00, the costs of issuing the cards as well as processing payments from these cards can make them economically impractical.
Micro or nano-payment systems provide further examples of the effects of transaction costs. One of the objects of a micro/nano-payment approach is to maintain and take advantage of a very high volume of web site viewers by offering content for a very low price. For example, a newspaper could make its articles available on-line for 5¢ or less. Other variations can include charging fractions of cents, that is, a smaller amount than the smallest possible amount of hard currency, for equally fractional amounts of content. One example involves charging a tenth of a cent for each web page in an online magazine. Another use would be to automatically charge, for instance, a tenth of a cent to send an electronic mail to a particular address. While this type of email charge system would be trivial for normal mail usage, it could seriously impact the economics of broadcast spam. However, most such applications are impractical from an economic standpoint due to transaction costs.
Establishing proof, that may be legally required, of age and location for certain types of transactions such as the purchase of alcohol or tobacco over the Internet as well as internet gaming can significantly increase the costs involved in such transactions.
Lottery related products such as the products described in U.S. Patent Publication Nos. US 2001/00395511, US 2004/0176158, 2004/0259626, and US 2005/0149393, especially using instant lottery tickets of the type described in U.S. Pat. No. 6,875,105, have not addressed the considerations discussed above.